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The Department of Homeless Services is changing its policy this month to require new applicants at homeless shelters. (Published Thursday, Nov 3, 2011)

Updated at 9:04 AM EST on Friday, Nov 4, 2011

People seeking a bed at city homeless shelters will have to prove they have no other options, under a new policy being put into effect later this month.

It's part of a Department of Homeless Services plan to save $4 million a year in this cash-strapped city; officials say the new policy will reserve its shrinking resources for those who are truly the neediest.

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That means the welcome mat will be taken away from anyone with temporary housing options, like Manuel Crespo, who has been staying on a mattress at his parents' home in the Bronx. He moved back there after separating from his girlfriend of 10 years.

But he's unhappy staying with his parents, and on $1,143 of income a month, is worried about affording his own place.

“My mother has Alzheimer’s," says Crespo. "My dad is 85 years old, so you know, it’s not easy living with them."

Crespo says he considers himself homeless, and so he comes to the homeless system.

The city’s homeless commissioner, Seth Diamond, disagrees.

“People who have alternatives are not homeless," Diamond says. "If they have a mother or a brother or a sister who can house them, that’s where they should go.”

When the policy change kicks in, Crespo will be required to answer questions about his recent housing history and whether he has any friends or relatives with whom he can stay.

Because Crespo is considered someone with options, he'll likely be sent away -- though he can choose to appeal the city's decision if he wants to.

Crespo isn't the only person in the shelter system who is not truly homeless under the city's new definition. Some 60 percent of people entering the system are coming not from the streets or from prison, but from other people's homes, the city says.

It's an indication of how the demographics inside the shelter system have changed: at the homeless intake office at the 30th Street Men's Shelter in Manhattan, for example, there are quite a few with recent work experience.

There's Thomas, who says he's just lost his laundromat job in Queens. And Benjamin, who's lost his doorman job in Brooklyn after 11 years. They did not want their last names used.

"All these years working and paying taxes, I don't like it,” Benjamin told NBC New York. “I am a little frightened, but it's a situation that I can't get out."

With more New Yorkers like Thomas and Benjamin putting a squeeze on the shelter system, officials say they can't afford not to enforce stricter guidelines. One bed costs the city $3,000.

City officials tell NBC New York the Cuomo administration green-lighted the new plan Thursday.
But lawyers for the homeless say it's a dangerous step.

“The city is playing with fire by implementing this policy, particularly in the winter," says Steven Banks of the Legal Aid Society. "And it's certainly going to result in vulnerable New Yorkers ending up on the streets.”

“That's in nobody's interest and we're going to have to go to court to prevent this from harming individuals," says Banks.

Banks argues a 30-year court order guarantees shelter to people with mental, physical or social dysfunction as well as people who meet the income requirements to collect public assistance. Banks warns some vulnerable people will slip through the cracks.

Diamond insists mentally ill people will not be subjected to eligibility interviews.

The implementation of a similar policy in the family shelter system caused years of controversy and court battles. But supporters say that policy ultimately worked.

Meanwhile, with some help from New York City, Manuel Crespo found an apartment shortly after leaving 30th Street.